‘Africa’s Young Entrepreneurs: Unlocking The Potential For A Brighter Future’, warns that Africa’s youth bulge poses an enormous threat to the region, unless more targeted support is provided to youth entrepreneurs, specifically in the age group 18 to 34.
In this latest study, data gathered in nine countries in Sub-Saharan Africa (SSA) - Angola, Botswana, Ghana, Malawi, Namibia, Nigeria, South Africa, Uganda, and Zambia - over three years, is used to understand the nature of youth entrepreneurship, as well as the policies that are needed to support young entrepreneurs in the region.
Report author and associate professor at the University of Cape Town, Jacqueline Kew says: “Young Africans are three times more likely than adults to be unemployed. And in a region where 62% of the population is under the age of 25, serious interventions are needed to ensure that the youth have access to jobs which are sustainable and crucially, that lead to more jobs for others.”
Youth in SSA most entrepreneurial in the world
GEM research has highlighted that youth in SSA are more entrepreneurial than youth in other world regions. Fifty-two per cent of youth in SSA express an intention to start a business and 28% are running their own businesses, compared with youth in the European Culture Countries (ECC) region – the lowest performing region. Just 19% of youth in that region express entrepreneurial intentions and only 8% are actually engaged in entrepreneurial activity (measured as a percentage of the adult population).
Key challenges for youth entrepreneurs in SSA
The GEM research has highlighted several factors that are currently preventing entrepreneurs from making a meaningful contribution to job creation in the region. Key pitfalls include: an over concentration of youth activity in just a handful of sectors; and a lack of innovation or newness in what they are offering.
The research shows that 64% of the youth in SSA are involved in the retail, hotel and restaurant trade and that almost all (97%) of youth businesses in the retail sector are low-growth businesses. In addition, two-thirds of the youth businesses in the region indicated that what they offer is not new to some or all of their customers, while 57% indicated that many other businesses offered the same product or service.
“Selling undifferentiated products and services in over-traded markets makes it extremely difficult for young entrepreneurs to generate a profit and will rarely lead to viable business creation over the longer term,” said Kew. “In addition, the use of technology by youth for business is also low.”
What needs to change to boost youth entrepreneurship in SSA?
Improving ICT and technology in the region is thus identified as a key focus area to boost entrepreneurship. Lack of coverage, cost of internet and cell phone access/services are infrastructural issues which need to be addressed.
GEM research has consistently found a strong correlation between level of education and the likelihood of starting and running a successful business. Yet youth in SSA have the lowest level of education in the world: One quarter of youth in SSA have less than a primary school education while 55% have not completed their secondary education.
“Among other interventions required, schools need to promote entrepreneurship as a career path alongside interventions that deal with skills gaps by, for example, promoting apprenticeships and technical and vocational education,” said Kew.
To improve financial access, the report recommends a range of interventions including easing access to credit through the banking system, providing incentives to financial institutions to lend to youth-owned businesses and providing young people with more training in how to manage money.
“Without focused improvement in the type of education offered, suitably tailored business support, youth-oriented finance options and better access to ICT and other technology, a large enough network of high-growth, export-led entrepreneurs, which the region desperately needs, will not be developed. With the right support Africa’s youth bulge could be converted into its greatest asset. Without support, it is a ticking time bomb that threatens to destabilise the entire region,” said Herrington.